End Zone
End Zone
As Hamilton pushes through the final yards of its Pan Am stadium showdown, we take a look back at the posturing, politics and power plays
By Lindsay Hutton
ARCHIVAL Civic Stadium photo Courtesy of THE Canadian Football Hall of Fame 
Throughout the debate, Fred Eisenberger stayed steadfastly – some say stubbornly – committed to (or, to critics, fixated on) a West Harbour site for the Pan Am stadium 
Ever-critical of Hamilton’s steep stake in the Pan Am Games, Ward 5 councillor Sam Merulla is among those questioning the case for the CP site
A year after those corks popped, the atmosphere is far less festive. Fewer matters of Hamilton’s public finance have drawn more incendiary debate.
It’s hard to imagine now, but it was all originally presented as a boon to Hamilton, cutting alongside promises of light-rail transit, lofty professions of “city-building” and an infrastructure windfall. We would inherit fistfuls of tourism dollars and the bid’s showpiece: the assurance of a stadium to be used for several events, but left to the city as a glittering legacy facility for the Hamilton Tiger-Cats.
But this past year saw the focus turn sharply from the games’ contribution to amateur sport and veer into months of a puerile push-and-shove between a cowed city council up for re-election and a notoriously unprofitable (if beloved) city-subsidized sports franchise vying to increase their sordid book value by way of increased public “pay-to-play” support. Any local wondering just what the Ticats are worth to the city will be astonished at what we’re soon locked in to pay to keep them.
Hamilton’s role in the Pan Am Games hatched at least a year before the initial bid, and was spearheaded by the late Dr. Gene Sutton (a member of Canada’s Olympic Committee and a tireless proponent of amateur sport) as well as the input of other community stakeholders, including the Ticats. Sutton was aided by David Braley – former owner of the Ticats, present owner of the BC Lions and Toronto Argonauts, and the initial director of the Pan Am bid (a chair he resigned after being appointed to the Senate in May). Braley made a well-known secret of his interest in Hamilton’s possible role in the Games, in order to secure a facility for the Ticats.
Hamilton’s role in the bid included 15,000-seat stadium for track and field and soccer, a 3,500-seat velodrome for cycling and a practice pool for McMaster. Three stadium sites were marked in a shortlist by city council, with a site in west harbour marked as frontrunner to play host to an upgraded 25,000-seat facility suitable for professional, high performance sport – namely professional football.
In the wintry grip of February 2009, Hamilton’s city council was feeling anything but miserly. They elected to allocate $60 million to the facilities’ capital fund and land purchase, borrowed from the Future Fund – a large dividend sired from the amalgamation of the city’s hydro utilities – under the notion that the expenditure reflected the fund’s mandate to enrich Hamilton’s economic base and social fabric. Despite $125 million in public monies pledged toward the city’s preferred site, a significant funding gap in the realm of tens of millions remained, without any private investment dollars yet to emerge, most notably from the Ticats.
By late 2009, however, plans for the west harbour stadium began to unravel. Rumblings emerged from the Ticat camp, misgivings about the feasibility of the site. This past May, team owner Bob Young took to the team’s website to blast the city’s lack of collaboration with the franchise, stating the site lacked proper highway access and visibility, as well as a paucity of parking – asserted by the club as being likely to equal a $7-million annual loss for the team. Pan Am board members were bewildered by the statement; the City dug in its heels: “Bob Young and the Tiger-Cats are on record as saying they would work with the City on ‘any site,’” said then-mayor Fred Eisenberger, going on to explain that the west harbour location had been confirmed by council on several occasions since the bid’s inception.
Citing the city council’s lack of communication and feeling betrayed by their talks with the Katz Group, who shared a memorandum of understanding with the City to discuss the control of the stadium (as well as Copps Coliseum) operations in June, a third-party directed facilitation between the Ticats and the City stopped abruptly. A few weeks later, entries in the Federal Lobbying Registry showed that CFL commissioner Mark Cohon took meetings to discuss league “expansion” into Atlantic Canada with several federal ministers, though the CFL’s representatives stated only a scheduled exhibition game in Moncton was discussed.
“When the talks broke down, I made several phone calls to other jurisdictions to test the interest of the Ticats moving,” says Ron Foxcroft, a local business owner and close associate to the team’s brass. “I will not say what those jurisdictions [were]. But I made those phone calls to people in high places: mayors, premiers, chairmen…” Federal ministers? “No, but Cohon did.” Though one wonders if this was a well-played charade devised to bolster the team’s iffy book value, both Foxcroft and Ticats president Scott Mitchell maintain there was significant interest from other municipalities.
An understandably frustrated HostCo (Pan Am’s board of directors) moved the track and field events to York University, leaving youth soccer and cycling to Hamilton’s stadium and velodrome, respectively. Lines were drawn in the sand shortly thereafter, with the Ticats offering up a preferred location on the east mountain – having flatly refused to ever play at the west harbour location – but the site was voted off the table by city council in August. Several deadlines set by HostCo to firm up funding and a site were reached and breached, and a firm gaze rested at a Canadian Pacific Railway (CP) yard at Longwood and Aberdeen avenues servicing Steelcare, a steel goods movement facility, adjacent to McMaster’s Innovation Park.
City staff set to work to evaluate the site in September, which at its introduction seemed to represent a compromise for both the city and the Ticats. A discouraged public seemed hopeful, but the emergent deal hinged on the laughable. Eyebrows shot to the ceiling when the report outlined that over $10 million of public money had been spent so far on this process, plus nearly 700 days of city staff time since May. Yes, that’s public money and resources depleted before a site had been secured.
Capital costs to build the stadium at the CP site were estimated at $166 million. This figure did not including buying the land, the relocation of the rail line or demolition – which sources say will cost upwards of another $30 million. According to city Brian McHattie, Sam Merulla and (then-councillor, now mayor) Bob Bratina, the CP lands might be the most expensive site yet (at press time, real estate actual costs were still held confidential). The Ticats would purchase a fraction of the land, provide $8-10 million over 10 years, plus a yearly ticket surcharge directed back to the city to cover the capital expenditure. In exchange the team “offered” to run the stadium for 20 years while accepting all stadium receipts, including parking fees, advertising and naming rights to the facility (the latter garnering the team a speculative $3 million a year).
“We already have an organization that runs our entertainment assets. It’s called HECFI,” says Graham Crawford, a local writer, gallery owner and civic gadfly. “It has a CEO, staff, premises, a budget, experience. Why would we set up another company to compete with them when it’s our stadium?”
It gets worse. The city would be on the hook for any facility improvements (such as replacement of turf), $200,000 yearly toward the capital reserve, and would pay the team a $300,000 “management fee” yearly, though the city would retain the rights to host some community events. Steelcare also would cede job losses, as some of their operations would need to relocate. Though the city would receive moderate chunks of sums annually to cover the initial $60-million expenditure, $125 million of public monies and more in future subsidy were set forward in the deal.
Though the deal between the city and the Ticats included the latter’s lofty offering to begin a legacy fund and a soccer academy, several questions remained. What would be done with the lands already purchased for over $9 million at the west harbour site? Even without buying the land, a funding gap of more than $40 million remained. Both the federal and provincial governments, already earmarking $70 million to the project, seem unlikely to cough up any extra funds. And, as Scott Mitchell admitted at the October 12 meeting at City Hall, “This is probably not the best site for private-sector investment because there’s a lack of development opportunities.”
Tussles over publicly funded stadia for for-profit franchises have become a plotline in professional sports for decades, though mostly south of the border. Economists agree on little, but in nearly 30 years of peer-reviewed study, the conclusion is unequivocal: No matter what city or professional sport, fiscal benefit to municipalities barely registers – at best. At worst, publicly funded stadia often become underused, serving as collateral for decades of steep public subsidy. Usually a club begins by bemoaning an aging facility that causes them to lose money, rumours soon emerge about moving the team to higher–subsidized pastures in another city, then an economic impact survey commissioned by the team is presented to the community to outline their economic merits.
“Across the board, we know sports stadia have little, if any, positive economic impacts on municipali ties, even when paired with big events like the Pan Am Games,” deadpans Brad Humphreys, a noted sports economist at the University of Alberta.
Robert Baade agrees. A professor of economics at Illinois’ Lake Forest College, Baade’s research in public finance and sport set the tone for further study. “Teams and leagues are very clever at convincing the politicians that if they don’t vote [for subsidies to sports facilities], they’ll lose the team,” he notes. “That type of pressure has certainly been exerted on politicians in the U.S. for years with a good measure of success.” The Seattle Sonics’ team ownership shipping south to Oklahoma is a recent example. Here at home, many CFL teams enjoy similar subsidies from municipalities (the Ticats receive roughly $1.3 million in subsidies per year for operations at Ivor Wynne stadium), several CFL teams are petitioning various levels of government on upgrades or new digs, including Regina, Ottawa and Winnipeg. Most recently, the CFL asked Parliament to provide a $12-million bump to the centennial Grey Cup in Toronto in 2012.
Team owners continue to plead their worth via bought-and-paid-for “economic impact surveys,” a forecast where the franchise provides a set of business goals (often including pumped-up prospects on numbers relating to season ticket holders, attendance, et cetera) to a private research firm. The Ticats provided their own economic impact survey -- authored by the Altus Group, a private consulting firm – in September.
The survey’s numbers wouldn’t be out of place on scented, heart-shaped paper: over $1.4 billion in economic activity generated from the Ticats and related companies for the first decade of operations in the stadium, a glowing projection that reads like manna to the mouth of a post-industrial city mired in red ink, hard-infrastructure debt and an unflagging 20 percent poverty rate.
A look at the process used to reach those kind of wow-inspiring economic declarations cuts the forecast off at the knees. It assumes revenue for a NASL expansion team that does not yet exist and “at least two” Grey Cup celebrations. On top of the 30-ish dates shared by the NASL and the CFL, the survey simulates an ambitious 150-plus events per year, including concerts and community events (for example, usually only upmarket stadia like Vancouver’s BC Place and Los Angeles’ Staples Centre host 200 events per year, and they’re not leashed to the practical limitations of an open-air facility). The survey also assumes a whopping 55 percent of patrons will be out-of-towners, including Ticats season ticket holders, a significant shift from the current Ticat fan demographic.
“In my professional opinion, [the survey] is entirely incorrect. There are known problems with that methodology, and they committed every one of those mistakes,” says Humphreys, noting that these figures are enormously inflated, even by American standards. “If that report were on television, it would have to carry a disclaimer saying it was a paid promotional announcement.”
These are forecasted “business goals” crunched via figures provided by the franchise. “The information we got [from Ticats ownership] was not itemized exactly what it was all going to be,” admits Peter Norman, the director of economic consulting at the Altus Group. “We received estimates of the number of rental days for the facility and the approximate revenues they would generate…. Our role is to demonstrate the effects of a business activity.”
It’s arguable that a team placed in a better facility can achieve profitable “business activities,” and no one can really blame Bob Young for looking to make a return on his investment. Young, a wealthy software developer, has invested $30 million in his local holdings since purchasing the team in 2003, when he saved the franchise from bankruptcy. However, a lousy on-field product runs alongside the club’s dubious economic history, with the team winning more than half of their regular season games only three times in the past decade.
“I don’t think the present ownership of the Ticats wants to do anything more than have a sustainable franchise. Not necessarily profitable, but to break even,” assures city manager Chris Murray, who oversees the Pan Am initiative. That said, he’s careful to point out the potential pitfalls associated with stadium operations. “The idea of running a stadium in a sustainable fashion and keeping a team… it stands to reason that revenues will have to be streamlined toward those two basic objectives.”
Even if the City and the Ticats can close the vast funding divide, a business or individual willing to offer such a sizable investment would likely change some of the present deal’s clauses. Though the CP site is likely to be submitted to HostCo, the endgame is set for February, when the city must provide a final funding plan and site, and with a new city council, how this saga will conclude is anyone’s guess.
Pragmatics aside, it’s unlikely that the stadium will offer the city or its taxpayers any tangible benefit, though few can deny the sentimental primacy of maintaining a 140-year-old sports franchise. At the end of the day, locals will have to be satisfied with little else, save for a shaky promise of a broadened infrastructure, when considering the stiff buy-in. “You’re really going to disappoint people if you say look, [the team can] promise significant economic return,” advises Baade. “In reality, it’s a quality of life issue and little else.”
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Appears in the Winter 2010 edition of Hamilton Magazine
